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Trillion-Dollar Grocery Industry on Cusp of a Revolution

The grocery industry is changing and changing fast. From checkout-free experiences like Amazon Go and home delivery from Instacart, to meal-kits from Plated and “groceraunts” (a restaurant within a grocery store), it’s a shopper’s market.

How can grocers thrive, differentiate, and serve shoppers on their terms? The answer is born out in three trends:

1) Personalized experiences will reign.

2) Online grocery sales will grow exponentially.

3) Speed and agility will determine the winners.

Personalized experiences will reign (some intelligence required)

As in all facets of retail, innovative and entertaining experiences will keep shoppers returning to stores. According to our recent research, 75% of shoppers want retailers to provide them personalized offers based on their prior engagement, yet 64% of shoppers say retailers don't truly know them. This latter fact comes as no surprise when we consider that most companies are able to analyze less than 1% of the data at their disposal. The answer to this dilemma: artificial intelligence (AI).

AI can be harnessed to find meaning from mounds of data so you can truly know your customer and give your interactions more significance. When used in email, it drives higher open rates, more click throughs, and increased conversion and basket size. A great example of this is Kroger, which uses Salesforce Marketing Cloud for email and mobile push notifications, and Salesforce Einstein for AI.

While the percentage of online grocery shopping today is low, the growth rate is high; penetration in the U.S. is expected to grow 20% annually through 2023.

The time is now to prepare for the inevitable tipping point. It’s easy to get caught up in all the possibilities and capabilities you should build, buy, or partner, but taking a shopper-first perspective, it comes down to two core competencies: shopper experience and integration.

First, let's breakdown experience. You own the shopper relationship and your brand, not any partners you enlist or capabilities you rent along the way. In a world where 60% of shoppers start with mobile, this means delivering inspiring offers across digital channels and providing a mobile-first commerce experience, supported by timely communications regarding order status and post-fulfillment support. In short, a complete CRM platform: Marketing, Commerce, Service. There is a temptation to rent these capabilities from an online grocery partner, but your customers shop both online and offline and expect a consistent experience. As the owner of the brand, the grocer should own the experience, full stop.

This brings us to the second core competency for online growth: integration. A recent survey revealed that the average retailer uses 39 disparate systems to manage the customer relationship. At the same time, as online grocery grows, so too will the complexity of product picking and fulfillment as we test, adapt, and scale myriad options.

A modern API-centric approach to integration, like that from Salesforce Mulesoft, allows grocers the flexibility to swap out components as their online business evolves, while delivering a consistent experience for shoppers.

Speed and agility will determine the winners (some innovation required)

Success will favor those who are able to innovate, test, and learn quickly. Whatever the innovation, teams that are able to collaborate more readily and design and deploy solutions in an agile manner will be ahead of the game.

A great example of collaboration comes from Instacart, which uses a mobile-first collaboration tool to enable their staff to more readily share information without the burden of legacy tools like emails and attachments. As a result, they are able to pivot and execute with remarkable agility.

These are exciting times to be in the grocery business. With its notoriously slim margins and little room for error, it’s sometimes daunting to consider the opportunities ahead and which path to take. But those who focus on understanding their customers, delivering personalized experiences, and building a platform of agility for their business will be best positioned to capitalize on growth online or wherever shoppers take you.